MeridianLink (NYSE:MLNK) versus NetSol Technologies (NASDAQ:NTWK) Critical Review

MeridianLink (NYSE:MLNK) and NetSol Technologies (NASDAQ:NTWK) are both small-cap business services companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, profitability, earnings, institutional ownership, valuation and dividends.

Volatility & Risk

MeridianLink has a beta of 1.02, meaning that its stock price is 2% more volatile than the S&P 500. Comparatively, NetSol Technologies has a beta of 1.1, meaning that its stock price is 10% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for MeridianLink and NetSol Technologies, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MeridianLink	2	3	2	0	2.00
NetSol Technologies	0	0	0	0	N/A

MeridianLink currently has a consensus price target of $20.40, suggesting a potential downside of 3.82%. Given MeridianLink’s higher probable upside, research analysts plainly believe MeridianLink is more favorable than NetSol Technologies.

Insider and Institutional Ownership

82.7% of MeridianLink shares are held by institutional investors. Comparatively, 16.0% of NetSol Technologies shares are held by institutional investors. 21.3% of MeridianLink shares are held by company insiders. Comparatively, 13.2% of NetSol Technologies shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares MeridianLink and NetSol Technologies’ top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MeridianLink	$304.30 million	5.35	-$42.54 million	($0.54)	-39.28
NetSol Technologies	$58.73 million	0.51	-$5.24 million	($0.38)	-6.92

NetSol Technologies has lower revenue, but higher earnings than MeridianLink. MeridianLink is trading at a lower price-to-earnings ratio than NetSol Technologies, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares MeridianLink and NetSol Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MeridianLink	-13.86%	-6.72%	-3.47%
NetSol Technologies	-7.33%	-11.38%	-7.33%

Summary

MeridianLink beats NetSol Technologies on 8 of the 13 factors compared between the two stocks.

About MeridianLink

MeridianLink, Inc., a software and services company, provides software solutions for banks, credit unions, mortgage lenders, specialty lending providers, and consumer reporting agencies in the United States. The company offers MeridianLink One, a multi-product platform that can be tailored to meet the needs of customers as they digitally transform their organizations and adapt to changing business and consumer demands; MeridianLink Portal, a Point of Sale system that allows financial institutions to expand existing lending and deposit account; MeridianLink Opening, a cloud-based online account opening and deposit software solution; MeridianLink Consumer, a full loan solution suite to banks and credit unions; and MeridianLink DecisionLender, a loan origination software (LOS) for finance companies. It also provides MeridianLink Mortgage, a cloud-based software designed for financial professionals to optimize the end-to-end mortgage loan origination process; MeridianLink Collect, a web-based debt collection software; Mortgage Credit Link, a web-based order fulfillment hub; and MeridianLink Business, a cloud-based platform that offers business lending solutions for banks and credit unions. In addition, the company provides analytics and business intelligence tools through MeridianLink Engage, MeridianLink Consulting, MeridianLink Data Connect, and MeridianLink Insight; Data Verification Software Solution, a cloud-based order fulfillment hub for bankers and credit officers; and loan origination systems, other credit decisioning tools, and additional solution modules. MeridianLink, Inc. was founded in 1998 and is headquartered in Costa Mesa, California.

About NetSol Technologies

NetSol Technologies, Inc. designs, develops, markets, and exports enterprise software solutions to the automobile financing and leasing, banking, and financial services industries worldwide. The company offers NFS Ascent, a suite of financial applications for businesses in the finance and leasing industry. Its NFS Ascent constituent applications include Omni Point of Sale, a web-based application; Contract Management System (CMS), an application for managing and maintaining credit contracts; Wholesale Finance System (WFS), a system for automating and managing the lifecycle of wholesale finance; Dealer Auditor Access System, a web-based solution that could be used in conjunction with WFS or any third-party wholesale finance system; NFS Ascent deployed on The Cloud, a cloud-version of NFS Ascent; and NFS Digital, that includes Self Point of Sale, Mobile Account, Mobile Point of Sale, Mobile Dealer, Mobile Auditor, Mobile Collector, and Mobile Field Investigator. The company also provides Otoz Digital Auto-Retail and mobility orchestration, a white-label SaaS platform; Otoz Ecosystem, an API-based architecture; and Otoz Platform, a white label platform, which includes Dealer/Admin Tool and Customer Portals. In addition, it offers system integration, consulting, and information technology products and services. It serves blue chip organizations, Dow-Jones 30 Industrials, Fortune 500 manufacturers and financial institutions, and vehicle manufacturers. The company was incorporated in 1997 and is headquartered in Encino, California.